AUD/JPY Surges as China's Weak Data Fails to Dampen Aussie's Strength

The Australian Dollar has continued to gain strength against the Japanese Yen, despite weak economic data from China. In July, China's retail sales grew by just 0.6% year-over-year, missing the forecasted 1.5%, and industrial production expanded by 4.5%, underperforming both the consensus estimate of 5.0% and the prior figure of 5.3%. The National Bureau of Statistics attributed the minor growth headwinds to extreme weather.

An NBS spokesperson emphasized that China's core development trajectory remains intact, but this news has not affected the Australian Dollar's performance against the Japanese Yen. On the other hand, weak Japanese GDP data complicates the Bank of Japan's ability to raise interest rates and normalize monetary policy.

The AUD/JPY pair extended its gains for the second successive day, trading around 113.20 during European hours on Monday. Strategists at Brown Brothers Harriman expect this week's Australian labour market releases to have a limited impact on policy expectations.